Investors going for broke in East Africa social enterprise

Wednesday May 14 2014

Social enterprise is the new buzz in East Africa. Left, Eco Fuel employees package their products, and a Wana employee delivers gas on his motorcycle. Photos/FILE

In Summary

Unreasonable East Africa, an organisation that helps young people to adapt the world to their environment in order to improve it, will from June 25 to July 31, host 24 social entrepreneurs, who run 14 ventures in Uganda, Kenya and Tanzania, at the Unreasonable Institute in Kampala.

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By Julius Barigaba The EastAfrican

Social enterprise is the new buzz in East Africa. The region’s social entrepreneurs — who are mainly from the younger generation — have come up with projects that make money while furthering social welfare.

Unreasonable East Africa, an organisation that helps young people to adapt the world to their environment in order to improve it, will from June 25 to July 31, host 24 social entrepreneurs, who run 14 ventures in Uganda, Kenya and Tanzania, at the Unreasonable Institute in Kampala.

During this period, the 14 delegates will network, share ideas, source capital and be mentored by 50 world-class entrepreneurs to turn their start-ups, most of which have existed for less than three years, into life-changing enterprises.

These are expected to solve social and economic challenges such as food security, access to electricity, financial literacy, household incomes and health care in East Africa.

The five-week boot camp in Kampala is modelled on the Unreasonable Institute in Boulder, Colorado, but it attempts to create projects tailored to the East African context.

Joachim Ewechu, chief executive officer and co-founder of Unreasonable East Africa, said that with mentoring and financing networks, the 14 chosen businesses are expected to grow into social enterprises and eventually scale up to meaningfully change the lives of more than one million people.

“We will work with them in the markets in which they operate and derive solutions from those markets,” he said.

A couple will pay $4,000 while an individual will fork out $3,000 for the programme, which will feature Iranian-born venture capital specialist Kamran Elahian.

Initial public offerings

Mr Elahian has built 10 companies, four of which were sold for between $70 million and $700 million. Three of his companies have raked in over $1 billion in their initial public offerings.

The fellows coming into the Unreasonable Institute are expected to draw inspiration from other social enterprises that have transformed societies in the past decade. Uganda’s coffee brand, Good African Coffee, is a good place to start.

In 2003, the proprietor, 44-year-old Andrew Rugasira, left a career in marketing for a social enterprise that engaged 14,000 coffee farmers in Kasese district, western Uganda, to sell their crop to his company in an arrangement that would see profits shared 50:50 between the producers and the company.

This couple own KadAfrica, one of the enterprises coming into the Unreasonable Institute, run a passion fruit farm in Kasese district, near Fort Portal.

Eric Kaduru, 29, was a public relations and advertising practitioner before switching to farming. Now the Kadurus work with outgrowers and more than 1,500 girls who dropped out of school for various reasons.

Their project started in 2013 in partnership with Catholic Relief Services and Caritas Fort Portal under a programme called Girls Agro Investment (GAIN).

“We provide outgrowers with free seedlings, basic inputs and a ready market for passion fruit. We combine the outgrowers’ produce with our own from the five-acre plantation. We also ensure that our outgrowers get a fair market value for their fruit,” said Rebecca, 27.

Myles Lutheran and Cosmas Ochieng Eco Fuels, Kenya

Eco Fuels produces and sells biofuel and organic fertilisers made from croton nut, which grows naturally across East Africa.

The product is environmentally sustainable, as it restores organic matter into the soil, leaves no waste and uses low-energy manufacturing.

Since inception in March 2012, Eco Fuel has sold more than 10,000 litres of biofuel and 100 tonnes of organic fertiliser, earning over $50,000.

American-born Sachi DeCou, who lives in Tanzania, has a power solution for a country where 60 per cent of the population uses mobile phones, but only 12 per cent have consistent access to electricity.

Before starting Juabar, Ms DeCou did the maths: Tanzanians spend 13 per cent of their total phone costs on travelling to charge their handsets. Then she provided a solution.

“We start each of our franchises — Juapreneurs — with a phone-charging business via our solar charging kiosks, which is a straightforward revenue source,” said the 35-year-old designer and artist.

From phone charging alone, each franchise earns $75-$175 per month.

Chantal Heutink, I-Care Pads, Kenya

Chantal Heutink, 45, who lives in Kisumu, western Kenya, began producing and selling high quality but affordable reusable sanitary pads aimed at schoolgirls.

Besides producing I-Care pads for more than 20,000 poor schoolgirls, her venture also provides training in menstrual hygiene management.

Heutink, a Dutch national, said her ambition is to reach a million I-Care users in 10 years.

Officials at Unreasonable East Africa said that this venture has not only broken the taboo around menstruation and reproductive health but also generated over $12,000 in revenue and reduced the percentage of girls missing school due to menstruation by 30 per cent.

Charles Nichols and Samir IbrahimSunCulture Kenya Ltd

SunCulture, which designs and sells solar-powered irrigation systems, has eliminated the need for expensive grid electricity, making it cheaper and easier for farmers in Kenya to grow high-value fresh fruits and vegetables.

Samir Ibrahim, the SunCulture CEO, studied finance and international business at the New York University Stern School of Business.

He worked at PricewaterhouseCoopers before leaving his corporate job in New York for the irrigation enterprise in Kenya. In Kenya, he teamed up with Mr Nichols, a fellow American, who studied mechanical engineering. Both are 25.

“We’re excited to leverage revolutionary technology like the SunCulture agrosolar irrigation kit to bridge the yield gap with solar power and water-saving drip irrigation,” Mr Samir said. SunCulture’s kit uses 80 per cent less water than the furrow irrigation method.

From its businesses, Jibu has generated $9,000 with their business-in-a-box model. They encourage entrepreneurs to reduce prices for the bottom 10 per cent of the market through subsidies funded by donors and carbon credits.

John Businge and Robert MakuneForever Sanitation Ltd, Uganda

Forever Sanitation provides sewerage services where there are none — in the slums of Kampala. The company uses unique equipment to empty pit latrines in low-income residential areas that are not accessible by the city’s waste removal vehicles.

The business has created a healthier environment for 250 households in Kampala, and generated about $10,000 in revenue.

Emmy Wasirwa and Bernard Mogaka Kinara Wana Energy Solutions, Uganda

Wana Energy sells affordable gas for homes and businesses, which comes with delivery, installation and safety training. The gas is cleaner, cheaper and more environmentally friendly than charcoal and firewood.

Since 2008, Wana has made over $1.65 million by building a customer base of more than 4,000 households who, on average, save about 25 per cent on cooking fuel costs.

The firm has reduced about 400 customers’ energy bills by a cumulative $30,000 and generated over $150,000 in revenue.

Carolyne Kimari GrabABook, Kenya

This project promotes a reading culture among children in rural and slum areas by establishing school libraries.

GrabABook is new and still trying to raise funding. But, since May 2013, it has successfully set up two libraries in Kenya.

Jack O’Regan and Tyler GoodwinSmartlife, Kenya

Smartlife rides on the sale of affordable, clean drinking water and health products to low-income families through retail locations and a subscription service.

In less than a year, they have sold 88,000 litres of water, making over $15,000.

Abubaker Musuuza Village Energy Ltd, Uganda

This firm assembles and distributes solar energy systems for off-grid households, businesses and institutions in the rural areas. They also train individuals as solar technicians to install and repair energy kits in the communities they supply.

They reached more than 4,000 customers since 2010, earning over $90,000.

Gideon Emorut and Lilian EmorutGeel Enterprises, Uganda

This firm provides quality health care services in eastern Uganda and western Kenya, and helps reduce preventable deaths in the two countries.

In the two-and-a-half years of its operation, Geel has evolved from a small clinic into a hospital offering radiology, prenatal, dental, orthopaedic, gynaecological and physiotherapy services. It has served 10,000 patients, earning about $130,000.